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Technical update: 16 June 2017

Violeta Todorova

Magellan Financial Group (MFG) – upside target reached

In our last update on May 12, 2017 we discussed the bullish outlook for the stock over the medium term and recommended clients buy on a pull back to around $24.50. The price corrected to $24.20 as expected and provided a great buying opportunity. A strong rally has unfolded over the past month and our initial upside price target of $27.50 has now been reached. The current rally has re-tested its all-time high of $28.22, where initial selling pressure is likely to arise. The momentum indicators have reached overbought territory, suggesting that the price is vulnerable to a short term pull back. The potential downside price target is $26.50.

While we continue to like the stock over the long term, given the proximity to key resistance and the overbought momentum conditions, active clients may consider trimming positions.

Janus Henderson Group (JHG) – short term weakness

JHG has been trading in a strong up trend since February 2017 which is still technically intact. The up trend has lost momentum over the past week and the price appears to be finding selling pressure around its key resistance of $45.40. While we do like the stock over the long term, and we see a good probability this resistance will eventually be broken upwards, the stock appears vulnerable to a pull back in the short term.

The potential downside price target is $42.00.

Reliance Worldwide (RWC) – overbought

RWC has been trading in an up trend since February 2017 which is still technically intact. Thursday's price action posted a record high of $3.73 pushing the momentum indicators into strongly overbought territory. Thursday's bar is an open/close reversal suggesting that the price is likely to pull back in the short term. The potential downside price target is $3.40.

Over the long term, we continue to like the stock but would like to see how far and in what price structure the correction will unfold before we update our long term price target. Active clients may consider trimming positions around current price levels. 

Australian Finance Group (AFG) – oversold

The up trend from the January 2016 low has lost momentum over the past five months and the price has been trading within the boundaries of a descending triangle. While this pattern shows loss of momentum and deterioration in sentiment, as long as support of $1.15 holds the bearish pattern is not confirmed and our view is neutral. We are cautious and will monitor closely this level of support in the coming month(s). 

In the short term, the price is likely to bounce off support very soon as the momentum indicators have reached oversold territory. The potential upside price target is $1.30 - $1.35.

More information

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Disclaimer(s): Analyst may own shares in some or all of the companies mentioned.

The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents ("Morgans") do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.